NEWS RELEASE 08/16/01

FASB Issues Statement on Asset Retirement Obligations

Norwalk, CT, August 16, 2001—Today the Financial Accounting Standards Board (FASB) issued Statement No. 143, Accounting for Asset Retirement Obligations. Initiated in 1994, the project focused on accounting for the costs of nuclear decommissioning. However, the Board later expanded the project's scope to include similar closure costs in other industries that are incurred at any time during the life of an asset. The publication may be obtained by placing an order on-line or by contacting the FASB's Order Department at 800-748-0659.

The standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The standard is effective for fiscal years beginning after June 15, 2002, with earlier application encouraged.

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Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely heavily on credible, transparent, and comparable financial information. Additional information about the FASB is available at this website.

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